The audit reveals that the land was offered to the department “for an increased price based on vendor expectations”.
“Management did not obtain a formal independent valuation of the property at that point in time. There was also no segregation of duties governing the roles and responsibilities related to land acquisitions,” it states.
The Camellia deal in June 2016 was by far one of the largest commercial property acquisitions by Transport for NSW in years. Between September 2014 and July 2019 the agency acquired 83 commercial properties for a total value of $99.6 million.
Labor finance spokesman Daniel Mookhey demanded Transport Minister Andrew Constance explain why his agency was “dancing to this developer’s tune” and “rushed to pay top dollar to buy toxic land from a willing seller”.
“[The] department broke speed records to buy a toxic site from a property developer without even bothering to value the land,” he said.
Mr Constance declined to comment, citing his referral of the matter to the Independent Commission Against Corruption.
Despite the risks identified in the audit, Transport for NSW did not refer the Camellia land deal to the ICAC.
A referral to the ICAC by Mr Constance – on November 12 this year – came more than two years after questions about the deal were first raised in state Parliament.
The internal audit is contained in bundles of sensitive documents tabled to Parliament, in response to a call for papers by Mr Mookhey.
Mr Mookhey said the audit’s failure to investigate why the agency agreed to pay tens of millions of dollars to clean up the developer’s toxic land “smells like a cover-up”.
The audit warned of the “high risk” from an inadequate framework for commercial land acquisitions, which raised the possibility of fraud and non-compliance.
The land at 6 Grand Avenue was acquired for the multibillion-dollar Parramatta light rail project.
The audit confirms that Transport for NSW management “accelerated” the acquisition after it was approached but failed to obtain a formal independent valuation of the property.
An independent valuation by Colliers was obtained only after the property was acquired but included caveats and recommendations that suggested “further investigation was required to substantiate the value of the land”.
The audit also found no documentary evidence to confirm that the agency conducted due diligence for the Camellia land deal or other acquisitions at Hornsby and Manly Vale.
Furthermore, the internal investigation “found no evidence” that independent checks were made to ensure acquisitions complied with standards.
And it warned that a lack of formal controls exposed the agency to a higher risk of non-compliance, and “greater opportunities for fraudulent activity, high probability of financial loss and potential operational inefficiencies”.
It also found that the “absence of conflict of interest checks” at regular points during acquisition processes exposed Transport for NSW to “an increased risk of perceived or actual fraud/corruption in the commercial land acquisition process”.
Billbergia refuted the assertion in the audit that it got in touch with Transport for NSW about selling the land, saying the department approached its agents at CBRE on March 14, 2016.
Transport for NSW did not answer specific questions but said in a statement that the internal audit into its business processes was undertaken as part of normal practices in 2019.
“Recommendations from the audit have been absorbed into our restructure program so that the appropriate systems and processes can be developed and implemented,” it said. “Given the matter of the land purchase has been referred to ICAC, it would be inappropriate to comment further.”
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Adele Ferguson is a Gold Walkley Award winning investigative journalist. She reports and comments on companies, markets and the economy.
Matt O’Sullivan is City Editor at The Sydney Morning Herald.